A federal judge has blocked a western Chicago suburb from enforcing an ordinance that bans all Airbnbs and other so-called short term housing rentals, as the judge determined a property owner in the village stood a good chance of prevailing on their claims the ordinance, which would put them out of business, amounts to an unconstitutional government "taking" of their property.
On May 8, U.S. District Judge Sharon Johnson Coleman granted a temporary restraining order to the company known as Blakelick Properties LLC in their dispute with the village of Glen Ellyn over the ordinance banning short term rentals in the community.
The dispute landed in the courts on April 27, when Blakelick Properties filed suit. According to court documents and state business records, Blakelick is owned and operated by investors and married couple David Blake and Melissa Footlick, of Fairway, Kansas.
According to court documents, Blake and Footlick purchased a house on Arboretum Drive in the community in 2021. At the time, the house was located in unincorporated DuPage County, but was later annexed into the village of Glen Ellyn.
According to court documents, the couple intended from the start to use the house as part of their growing portfolio of short-term rental properties in the Chicago area. To that end, the couple said they secured a mortgage loan that could only be financially profitable for them if the home was used as a short-term rental, listed through online vacation rental sites, like Airbnb.
The couple told the court any laws or regulations forbidding them from using the house in that manner would essentially force them to sell off the property under a "fire sale," resulting in a steep financial loss.
However, in recent years, the couple asserted they have repeatedly clashed with a neighbor living next door to their Arboretum Drive property. In their complaint, Blake and Footlick assert the neighbor would repeatedly call the police to their property to harass their guests, allegedly primarily targeting black or Latino guests, by claiming they were causing a nuisance.
Blake and Footlick assert they installed noise monitors and cameras on the property and have instituted tighter screening of guests staying at the property.
In all, the couple claimed "there have been at most one or two incidents (out of 115 bookings) arguably constituting a private nuisance" to neighbors, with "both occurring in the summer of 2023 prior to ... implementing stricter rules, more noise monitoring and security cameras and tighter screening of potential guests."
According to court documents, the village also has reportedly received "no complaints ... recently."
Nonetheless, the plaintiffs assert village elected officials still acted at the urging of neighbors to outlaw all Airbnb-type rentals in the village.
"There is no rational basis for (the village) to classify all short-term rentals as 'public nuisances' in Glen Ellyn," Blake and Footlick wrote in their complaint. "To the contrary, ... the Village does not know of any nuisances unless complaints are made to the police, and the Village has not received any recent complaints about short-term rental activity.
"(Glen Ellyn) cannot, consistent with Due Process, arbitrarily ban (Blakelick's) legal business and burden all other current and future property owners in Glen Ellyn on the basis of unverified and possibly fictitious, highly exaggerated and/or pretextual complaints by a single individual about his neighbor," Blake and Footlick said.
The complaint asserts the ordinance amounted to an unconstitutional "regulatory taking" of their property. Under such regulatory takings, governments do not directly seize a property, but instead use new rules, laws or ordinances to strip it of value by forbidding owners from using it in a formerly legal and profitable manner.
The lawsuit further accused Glen Ellyn of racial discrimination and violation of federal fair housing laws by allegedly outlawing Airbnbs, which the complaint said are largely rented by black and Latino visitors, to allegedly "reinforce existing patterns of racial segregation in the Village under the pretext of addressing a 'public nuisance' ... eliminating one of the most affordable and popular options for Black, Latino and other minority ethnic groups to enjoy the privileges and benefits of living in the predominantly white residential neighborhoods" in Glen Ellyn.
As part of the lawsuit, Blake and Footlick asked the court to enter a temporary restraining order forbidding the village from enforcing the ordinance while the lawsuit plays out in court.
In her ruling, Judge Coleman agreed to block the ordinance, saying it was clear to her that the ordinance, if allowed to take effect, would ruin Blakelick's business in Glen Ellyn, causing "irreparable harm."
The judge specifically rejected the village's arguments that shutting down all Airbnbs in the village was no different than a "false arrest," because any business owner harmed by it could later pursue "money damages" to compensate for their destroyed business.
"(Blakelick) claims that the Ordinance would prevent Plaintiff from operating its business completely as it could not advertise its Property on the internet for short-term rentals," the judge wrote. "If Plaintiff cannot utilize the Property for short term rentals, Plaintiff would have to sell the Property which would effectively erase Plaintiff’s business completely.
"This is enough to show irreparable harm."
The judge further said she believed the Airbnb owners were likely to prevail on their claims that the ordinance was also unconstitutional.
"The facts suggest that Plaintiff acquired the Property under the assumption it could use the Property indefinitely for short-term rentals," the judge wrote in her order. "The Ordinance would prevent Plaintiff from using the Property for the purpose for which it was purchased and would divest the Property of all economic use, resulting in loss to Plaintiff.
" The Court finds Plaintiff is likely to succeed on the merits of its regulatory taking claim because the Ordinance would prevent Plaintiff from economically utilizing the Property in a feasible manner and interfere with Plaintiff’s investment-backed expectations."
The judge gave the village until May 22 to respond to Blake and Footlick's request for a preliminary injunction blocking the ordinance more permanently.
Blake and Footlick were represented by attorney Shorge Sato, of Chicago.
The village is represented by attorneys Michael E. Kuwaja, Richard J. Veenstra and Deborah A. Ostvig, of the firm of Schain Banks Kenny & Schwartz, of Chicago.